Word: mercerize
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Last year, pension plans of America's 1,500 largest companies lost more than $400 billion, mainly because of the collapse of the equities market in which the bulk of those plans are invested, according to a new report from Mercer, a financial-consulting firm. Pension plans are also being hit on the other side of the balance sheet, as shrinking yields on Treasury bonds expand the scope of their pension fund liabilities. Taken together, the double dose of bad news means companies will have to pony up as much as $70 billion in pension contributions in 2009 - up from...
...Mercer analysts attribute the developments mainly to the collapse of the equity market, in which many U.S. pension plans are invested. But pension funds are being hit on the other side of their balance sheet as well, as declining yields on Treasury bonds swell the size of their pension fund liabilities...
...help many low- and middle-income people participate in retirement programs for the first time. "You can't have companies going from a position of broad stability 12 months ago to having a hole of $280 billion in their pension plans," says Adrian Hartshorn, a lead analyst on the Mercer report. He added: "People are hurting because of the stock market, and there needs to be a national debate around how people save, in the long-term, for retirement...
...last year, the funded status of the pension plans Mercer analyzed has fallen from an estimated 104% (a surplus) to 80% (a deficit). Now, companies are scrambling to determine how to make up the difference. There are two key ways to do that, with the easiest being a stock market recovery. But there's no telling when that will happen...
...worth noting that barely half of the companies that Mercer examined reported sponsoring a so-called defined pension plan: Simply put, it's becoming a relic, as companies scale back retirement options to shave one of the most expensive employee costs...